California airport car rental startup sued for unfair competition

On behalf of Klein & Wilson posted in Business Torts on Tuesday, July 9, 2013.

Three teenagers operate FlightCar out of a small green building just south of the San Francisco International Airport. FlightCar is a different type of airport car rental company and it's making waves in more ways than one. It's drawn the attention of the city, which has filed a lawsuit for unfair competition.

FlightCar's business model is different because they don't use traditional rental cars. They rent out travelers' cars and pay them a share of the money made from each rental, as well as a place to park their car for free while they are traveling. Also included is a free car wash. FlightCar has seen their share of unique vehicles in their lot, too, including a Lotus and a Porsche Boxster.

The 18-year-old chief executive officer of FlightCar said it simply doesn't make sense to have thousands of cars sitting in a parking lot at the airport while their owners are away and thousands more cars sitting in another parking lot owned by a car rental company. FlightCar is built on the business idea of a "sharing economy," where companies try to make it easier to share property and earn money in the process.

The city of San Francisco, though, says FlightCar is not abiding by the regulations that govern car rental companies and is guilty of unfair competition because the company is undercutting its competitors. A spokesman for the airport said they only want "to enforce a consistent standard."

The lawsuit wants FlightCar shut down until it complies with the regulations, such as those requiring the company to pay the airport 10 percent of its gross profits and to pick up and drop off its customers at a specific area. The airport spokesman says most of the company's customers come from the airport, so the company needs to comply with the airport's regulations governing car rental companies. FlightCar's teenage founders say that isn't true because their company is not a regular car rental company. That is the real question the lawsuit will have to decide -- what type of company is FlightCar?

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